This is the latest installment of the Amazon Briefing, a weekly Modern Retail column about the ever-changing Amazon ecosystem. To receive it in your inbox every week, sign up here.
Amazon is doing everything in its power to snag as many holiday shopping dollars as it can, this time by heavily discounting items it sells under its own brands.
This week, the Seattle company kicked off a new deals event offering aggressive discounts on its private-label products under “last-minute deals.” Amazon is offering wide-ranging discounts between 10%-60% on Echo devices, its popular line of Kindle e-readers and its in-house digital entertainment gadgets among others. Simultaneously, the company is also running discounts across home, kitchen, electronics, toys, fashion and beauty products until Dec. 21. Amazon is offering 45% off on winter wear clothing branded as Amazon Essentials. The company is also offering 33% off on its Solimo branded melatonin gummies. Beyond its own products, Amazon’s “Very Merry Deals” are also offering nearly 70% off on home essentials, kitchen and electronics from some third-party brands like Shark, Nespresso and Bose.
Many of these discounted items have a tag “Arrives before Christmas,” indicating they’re available for delivery before Dec. 24.
The promotions are being made at a time when Christmas shopping tends to move to buy online, pickup in-store purchases. By offering steep discounts on products that can still be delivered before Christmas, Amazon is attempting to dissuade these last minute shoppers from visiting stores. While this strategy is not new for Amazon, retail experts agreed that the company is providing more substantial discounts this year. This move could also help Amazon clear out excess inventory, given that in the summer the company was reportedly considering exiting the private label business amid weak sales and growing regulatory concerns.
“I think this is Amazon’s way of trying to capture as many holiday shopping dollars as possible, while also sending the message that it is a low-price leader and deal-maker,” said Lesley Hensell, co-founder of Riverbend Consulting, an agency that works with sellers on Amazon’s marketplace. “This year, however, Amazon is really working to maximize the holiday season. They were the first retailer to roll out holiday deals, and they will likely be the last with true doorbuster-style deals,” added Hensell.
And for good reason: Amazon has encountered a number of challenges this year, including (but not limited to) inflation and a sharp slowdown in e-commerce sales. While the company returned to double-digit sales growth in the third-quarter, thanks to its advertising business and AWS, its core marketplace business remains under significant pressure.
Jordan McGee, associate director of e-commerce at Pattern agreed that deals offered on Amazon this year have been higher than years past. “Amazon, 1P and 3P sellers all seem to be more aggressive in their discounts this year — which is likely a response to the need to clear out excess inventory, and [on Amazon’s part] to create more holiday moments for consumers,” he said.
Some sellers on Amazon have said that they have been stuck with excess inventory from the previous holiday season. Meanwhile, others are worried about clearing certain products at a time economic conditions are causing shoppers to cut back on holiday spending.
“Amazon’s new deep holiday discounts are likely meant to keep people shopping online in mid-December, a time when shopping activity typically pivots to click-and-collect and brick-and-mortar transactions,” said Andrew Lipsman, principal analyst for retail and e-commerce at Insider Intelligence in an emailed response.
While Amazon is calling this its first Very Merry Deals event, Hensell pointed out that this isn’t a new strategy for the online retail giant. Both in 2019 and 2020, Amazon had run similar last-minute deals campaign, she said. Plus, these deals aren’t likely something third-party sellers can take advantage of. “These deals feature Amazon’s own products, as well as national brand items that are sold by Amazon itself. They do not include third-party sellers, to my knowledge,” added Hensell.
As of 2020, Amazon’s private-label division offered 243,000 items under 45 different house brands, The Wall Street Journal reported. According to Marketplace Pulse research, Amazon only trimmed failed products from its private labels portfolio which were not contributing meaningful sales to the division.
Ultimately, Amazon wants to keep holiday shoppers hooked with deals till the very end and on its own terms.
“Since Amazon doesn’t have as much control over the discounts offered by third-party sellers, it can offer a wider array of deeply discounted goods with its own private label products. The more discounts Amazon can make available, the longer it can keep holiday shoppers engaged,” Lipsman added.
Amazon news to know
- The head of devices at Amazon.com said that despite layoffs the company is still committed to expanding the Alexa ecosystem, Bloomberg reports.
- As part of its cost-cutting measures, Amazon postpones recruiting graduates until the end of 2023, Financial Times reports.
- Amazon has launched a tool similar to TikTok called Inspire, that will let users purchase goods from a curated feed of images and videos, The Wall Street Journal reports.
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